Question 1

Along the vertical axis of the production function we typically measure

Accepted Answer

A)  revenue.
B)  the marginal product of the input.
C)  the quantity of input.
D)  the quantity of output.E) A) and C)
F) None of the above

Question 2

Figure 18-5
The figure shows a particular profit-maximizing, competitive firm's value-of-marginal-product (VMP)  curve. On the horizontal axis, L represents the number of workers. The time frame is daily. 
-Refer to Figure 18-5. Assume that two points on the firm's production function are (L = 2, Q = 180)  and (L = 3, Q = 228) , where L = number of workers and Q = quantity of output. The firm pays its workers $120 per day. The firm's non-labor costs are fixed, and they amount to $250 per day. We can conclude that

Accepted Answer

A)  the firm sells its output for $12 per unit.
B)  if the firm is currently employing 2 workers per day, then profit could be increased by $48 per day if a third worker is hired.
C)  the marginal cost per unit of output is $2.50 when output is increased from 180 units per day to 228 units per day.
D)  the firm's maximum profit occurs when it hires 3 workers per day.E) B) and C)
F) B) and D)

Question 3

Table 18-6 
-Refer to Table 18-6. What is the value for the cell labeled CC?

Accepted Answer

A)  650
B)  600
C)  100
D)  50E) A) and B)
F) A) and C)

Question 4

Juanita is trying to convince the owner of a jewelry store to hire her. She argues that she could help the shop sell an additional three rings per day for a profit of $20 each. If the facts are not in dispute, but the owner does not hire her, then

Accepted Answer

A)  the wage rate must be less than $60 per day.
B)  hiring Juanita would involve a negative marginal product.
C)  the wage rate must be more than $60 per day.
D)  the wage rate must be less than $20 per day.E) A) and B)
F) A) and C)

Question 5

If a firm experiences diminishing marginal productivity of labor, the marginal product

Accepted Answer

A)  increases as total product increases.
B)  decreases as total product increases.
C)  increases as total product decreases.
D)  decreases as total product decreases.E) B) and D)
F) A) and D)

Question 6

Because workers in the U.S. economy receive most of the total income earned, which of the following factors of production is considered to be the most important?

Accepted Answer

A)  profit
B)  wages
C)  interest
D)  laborE) B) and D)
F) B) and C)

Question 7

Diminishing marginal product occurs when

Accepted Answer

A)  the marginal product of an input increases as the quantity of the input increases.
B)  the marginal product of an input decreases as the quantity of the input increases.
C)  total output increases as the quantity of an input increases.
D)  total output decreases as the quantity of an input increases.E) B) and C)
F) A) and D)

Question 8

Why do we say that the demand for labor is a derived demand?

Accepted Answer

A firm's demand for labor (or ...

Question 9

Scenario 18-8
Suppose the following events occur in the market for university economics professors.
Event 1: A recession in the U.S. economy lowers the opportunity cost of going to graduate school in economics to become a university economics professor.
Event 2: A decreasing number of students in U.S. primary and secondary schools decreases the number of students entering college, decreasing the output price of university economics professors' services.
-Refer to Scenario 18-8. As a result of these two events, holding all else constant, the equilibrium quantity of university economics professors will

Accepted Answer

A)  increase.
B)  decrease.
C)  not change.
D)  It is not possible to determine what will happen to the equilibrium quantity.E) A) and B)
F) All of the above

Question 10

Figure 18-7 2 and the current wage is W1, A) there is a surplus of labor. B) the quantity of labor demanded exceeds the quantity of labor supplied. C) an increase in the minimum wage could restore equilibrium in the market. D) firms will need to raise the wage to restore equilibrium." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 18-7. If the relevant labor supply curve is S2 and the current wage is W1,

Accepted Answer

A)  there is a surplus of labor.
B)  the quantity of labor demanded exceeds the quantity of labor supplied.
C)  an increase in the minimum wage could restore equilibrium in the market.
D)  firms will need to raise the wage to restore equilibrium.E) B) and C)
F) C) and D)

Question 11

Does an upward-sloping labor-supply curve mean that people respond to a decrease in the wage by enjoying more leisure or less leisure?

Accepted Answer

An upward-sloping labor-supply...

Question 12

The negative slope of the value of marginal product curve is most easily explained by

Accepted Answer

A)  tight labor markets.
B)  a surplus of workers.
C)  diminishing marginal product.
D)  diminishing marginal cost.E) A) and B)
F) All of the above

Question 13

Figure 18-3 
-Refer to Figure 18-3. What is the marginal product of the fourth worker?

Accepted Answer

A)  1 unit
B)  2 units
C)  3.75 units
D)  15 unitsE) A) and D)
F) None of the above

Question 14

To maximize profit, a competitive firm hires workers up to the point of intersection of the

Accepted Answer

A)  marginal product curve and the wage line.
B)  value of marginal product curve and the wage line.
C)  value of marginal product curve and the marginal revenue curve.
D)  total revenue curve and the wage line.E) A) and B)
F) None of the above

Question 15

The owners of capital resources are compensated according to the

Accepted Answer

A)  purchase price of the capital stock.
B)  marginal product of capital.
C)  value of the marginal product of capital.
D)  absolute level of production of final goods and services.E) A) and C)
F) B) and C)

Question 16

Table 18-1 
-Refer to Table 18-1. Suppose that the firm pays its workers $80 per day. Each unit of output sells for $15. How many days of labor should the firm hire?

Accepted Answer

A)  3
B)  4
C)  5
D)  6E) B) and D)
F) None of the above

Question 17

Diminishing marginal product affects the shape of the production function in what way?

Accepted Answer

A)  The slope of the production function decreases as the quantity of input increases.
B)  The production function becomes steeper as the quantity of input increases.
C)  The production function slopes downward.
D)  The production function is horizontal beyond a certain quantity of input.E) A) and D)
F) A) and B)

Question 18

The value of the marginal product of labor is calculated by multiplying the

Accepted Answer

A)  price of output by the quantity of labor.
B)  price of output by the marginal product of labor.
C)  wage by the quantity of labor.
D)  wage by the marginal product of labor.E) None of the above
F) A) and B)

Question 19

Consider the labor market for computer programmers. Because of the dot.com boom in the late 1990s, a lot of workers went to school to learn how to write computer code for one of thousands of new dot.com companies. However, when these computer programming students graduated, the dot.com bust took place. The dot.com bust decreased the value of the marginal product of computer programmers. Holding all else equal, what effect did these two circumstances have on the equilibrium wage in the labor market for computer programmers?

Accepted Answer

A)  The equilibrium wage increased.
B)  The equilibrium wage decreased.
C)  The equilibrium wage did not change.
D)  It is not possible to determine what happens to the equilibrium wage.E) A) and C)
F) A) and B)

Question 20

Table 18-1 
-Refer to Table 18-1. What is the marginal product of the fourth worker?

Accepted Answer

A)  5
B)  7.5
C)  8
D)  30E) A) and B)
F) A) and D)

Exam 18: The Markets for the Factors of Production

The owners of capital resources are compensated according to the

Correct Answer
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Along the vertical axis of the production function we typically measure

Correct Answer
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To maximize profit, a competitive firm hires workers up to the point of intersection of the

Correct Answer
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Figure 18-7 -Refer to Figure 18-7. If the relevant labor supply curve is S₂ and the current wage is W₁,

Correct Answer
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Table 18-1 -Refer to Table 18-1. Suppose that the firm pays its workers $80 per day. Each unit of output sells for $15. How many days of labor should the firm hire?

Correct Answer
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If a firm experiences diminishing marginal productivity of labor, the marginal product

Correct Answer
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The negative slope of the value of marginal product curve is most easily explained by

Correct Answer
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Juanita is trying to convince the owner of a jewelry store to hire her. She argues that she could help the shop sell an additional three rings per day for a profit of $20 each. If the facts are not in dispute, but the owner does not hire her, then

Correct Answer
verified

Because workers in the U.S. economy receive most of the total income earned, which of the following factors of production is considered to be the most important?

Correct Answer
verified

Correct Answer
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Why do we say that the demand for labor is a derived demand?

Correct Answer
verified
A firm's demand for labor (or ...
View Answer

Does an upward-sloping labor-supply curve mean that people respond to a decrease in the wage by enjoying more leisure or less leisure?

Correct Answer
verified
An upward-sloping labor-supply...
View Answer

Table 18-1 -Refer to Table 18-1. What is the marginal product of the fourth worker?

Correct Answer
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Table 18-6 -Refer to Table 18-6. What is the value for the cell labeled CC?

Correct Answer
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Diminishing marginal product occurs when

Correct Answer
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Figure 18-3 -Refer to Figure 18-3. What is the marginal product of the fourth worker?

Correct Answer
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The value of the marginal product of labor is calculated by multiplying the

Correct Answer
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Diminishing marginal product affects the shape of the production function in what way?

Correct Answer
verified

Exam 18: The Markets for the Factors of Production

The owners of capital resources are compensated according to the

Correct AnswerverifiedShow Answer

Along the vertical axis of the production function we typically measure

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To maximize profit, a competitive firm hires workers up to the point of intersection of the

Correct AnswerverifiedShow Answer

Figure 18-7 -Refer to Figure 18-7. If the relevant labor supply curve is S2 and the current wage is W1,

Correct AnswerverifiedShow Answer

Table 18-1 -Refer to Table 18-1. Suppose that the firm pays its workers $80 per day. Each unit of output sells for $15. How many days of labor should the firm hire?

Correct AnswerverifiedShow Answer

If a firm experiences diminishing marginal productivity of labor, the marginal product

Correct AnswerverifiedShow Answer

The negative slope of the value of marginal product curve is most easily explained by

Correct AnswerverifiedShow Answer

Juanita is trying to convince the owner of a jewelry store to hire her. She argues that she could help the shop sell an additional three rings per day for a profit of $20 each. If the facts are not in dispute, but the owner does not hire her, then

Correct AnswerverifiedShow Answer

Because workers in the U.S. economy receive most of the total income earned, which of the following factors of production is considered to be the most important?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Why do we say that the demand for labor is a derived demand?

Correct AnswerverifiedA firm's demand for labor (or ...View AnswerShow Answer

Does an upward-sloping labor-supply curve mean that people respond to a decrease in the wage by enjoying more leisure or less leisure?

Correct AnswerverifiedAn upward-sloping labor-supply...View AnswerShow Answer

Table 18-1 -Refer to Table 18-1. What is the marginal product of the fourth worker?

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Table 18-6 -Refer to Table 18-6. What is the value for the cell labeled CC?

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Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Diminishing marginal product occurs when

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Figure 18-3 -Refer to Figure 18-3. What is the marginal product of the fourth worker?

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The value of the marginal product of labor is calculated by multiplying the

Correct AnswerverifiedShow Answer

Diminishing marginal product affects the shape of the production function in what way?

Correct AnswerverifiedShow Answer

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Figure 18-7 -Refer to Figure 18-7. If the relevant labor supply curve is S₂ and the current wage is W₁,

Correct Answer
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A firm's demand for labor (or ...
View Answer

Correct Answer
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An upward-sloping labor-supply...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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